Federal Regulators Urged to End Utility Practice of Funneling Ratepayer Money to Anti-Environment Trade Groups

More than 300 energy justice, environmental and community groups urged the Federal Energy Regulatory Commission today to address utility company behavior that forces millions of customers to finance anti-environment trade groups.

In a letter to the commission, the groups said current accounting practices that allow utilities to use ratepayer money for trade association dues and other advocacy spending undermine climate justice and the transition to renewable energy.

“FERC needs to stop this sneaky practice of forcing utility customers to bankroll trade associations that are pushing harmful, fossil-fuel friendly policies,” said Gaby Sarri-Tobar, an energy justice campaigner at the Center for Biological Diversity. “Ratepayers are already saddled with unaffordable utility bills, climate-fueled disasters and pollution. It’s despicable that utilities also use customers’ money to prop up trade groups that are stifling the renewable energy transition.”

In December FERC issued a notice of inquiry and requested public input on a series of questions, including what actions the commission should take to ensure transparency in industry association expenses and customer charges. This came in response to the Center’s 2021 petition urging the commission to amend the agency’s accounting system to require utilities to either demonstrate how funding these groups is in the public interest or provide this funding from shareholders rather than ratepayers.

“Utilities and utility regulators have a responsibility to act in the best interest of the communities they serve,” said Nathan Phelps, regulatory director at Vote Solar. “Forcing ratepayers to unwittingly fund actions that set our climate progress back is completely at odds with that obligation. I hope FERC will recognize the harm done under the current accounting system and take swift action to right this wrong.”

Every year utilities charge their customers tens of millions of dollars to fund special interests and trade associations engaged in political activities. Many of these trade groups, including the Edison Electric Institute and American Gas Association, work against the public interest by actively thwarting renewable energy and undermining public health.

“For decades, low-income, Latinx, Indigenous and Black communities have been disproportionately impacted as a result of environmental racism, from Cancer Alley to the Flint water crisis,” said Marquita Bradshaw, executive director of Sowing Justice. “Oftentimes at the hands of elected officials and the federal government, fossil energy disguises the toxic burden and its impact on public health and the economic health of fenceline polluted communities. Enough is enough. Utilities should not be bankrolling fossil fuel trade associations that dig us deeper into the climate crisis.”

Formal comments on FERC’s notice were due today. In its comments, following up on its 2021 petition, the Center urged FERC to change its accounting rules to make shareholders pay for industry association dues unless a utility can demonstrate a benefit to ratepayers. It asked the commission to clarify that ratepayers may not be saddled with the costs of funding utility efforts to undermine clean air and water and other environmental regulations.

“The Center petition made a rather small ask of federal regulators,” said John Farrell, director of the Institute for Local Self-Reliance’s Energy Democracy Initiative. “It asked that FERC require utility corporations to prove that their trade association dues serve customers interests, rather than presuming that they do despite mountains of evidence to the contrary.”

Major electric utilities like Southern Company, Duke Energy, DTE Energy and the Tennessee Valley Authority use ratepayer money to pay dues to trade groups that teach utility executives how to fight renewable energy policies, prevent local communities from phasing out fracked gas to reduce greenhouse gas emissions and slow climate change, and undermine competition that could lead to lower utility prices.

“It is absurd and unjust that a portion of our monthly bills are going to the Edison Electric Institute, a trade association that lobbies against our communities’ wellbeing in every way,” said Bridget Vial, energy democracy organizer at Michigan Environmental Justice Coalition. “This trade group opposes clean air protections, even as southwest Detroit and Dearborn breathe in toxic levels of ozone and sulfur dioxide and opposed pandemic shutoff protections even when our communities most needed reliable power. FERC must take action so that we are not forced to pay the dues of the corrupt fossil fuel industry and their lobbyists.”

A movement is growing against the longstanding practice of allowing utilities to charge ratepayers for advocacy that serves the utility’s own interests rather than ratepayers. This includes a decision from Kentucky utility regulators saying ratepayers can’t be charged for EEI dues and a New York law that prevents utilities from recovering payments to trade groups engaged in lobbying.

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